Vietnam's commercial lending rates likely to fall next month

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Vietnam's commercial lending rates will likely decline next month as liquidity at banks has improved and the rate of inflation has slowed, said Le Xuan Nghia, vice-chairman of the National Financial Supervisory Commission.

Interbank lending rates have also been stable and at low levels, Nghia, who advises the prime minister on economic matters in his role on the commission, said in an interview in Hanoi Thursday.

"The chance for interest rates to come down a bit next month is real," Nghia said. "If we don't bring down borrowing costs to help companies to do their business, this can result in an economy of both inflation and stagnation, which is very dangerous."

The country's central bank raised interest rates every month this year through May to tame accelerating inflation stoked by surging energy and food costs and a weaker currency. Companies in Vietnam have found it "difficult" to pursue projects when the cost of capital was as high as 30 percent, Nghia wrote in a statement released at a conference in Hanoi Thursday.

Nguyen Van Binh, who became governor of the State Bank of Vietnam this month, said earlier that the central bank aimed to lower dong lending rates to a range of 17 percent to 19 percent starting from mid-September through to the end of 2011.

Consumer prices in Vietnam increased 22.16 percent in July from a year earlier, the fastest rate among 17 Asian economies tracked by Bloomberg.

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